The Effect of Corporate Performance on Stock Prices of Quoted Nigerian Banks

Abstract

The aim of this study was to determine the effect of corporate performance on stock prices of quoted Nigerian banks. The ex-post facto research design was adopted. This enabled the researcher make use of secondary data to determine the effect of earnings per share, dividend per share, return on equity and price earnings ratio on share prices of Nigerian banks. The following performance indicators: earnings per share, dividend per share, return on equity and price earnings ratio were the independent variables while the dependent variable was share prices. The source of data for share prices and part of dividend per share were the publication of the Capital Assets Ltd while others were sourced from the annual report of the selected banks for the years under study. The dependent and independent variables were observed over a period of eleven years, that is from 2007 to 2017. The analysis was a panel data analysis and were analyzed using the Ordinary Least Square (OLS) technique. The hypotheses were tested at 5% level of significance. The result revealed that earnings per share had a positive and non-significant impact on share prices, dividend per share had a positive and significant impact on share prices, return on equity had a positive and non- significant impact on share prices and price earnings ratio had a positive and non- significant impact on share prices. Hence, the study therefore concluded that share price is an important indicator of corporate performance of Nigerian banks. It is recommended amongst others that banks should put more emphasis on growing their fundamentals as this will help to boost share prices.